Cisco Taps Neutral Tandem to Offer First White-Label Hosted Collaboration Service for the Channel

New service will enable VARs and Integrators to provide turn-key, cloud-based, hosted UC solutions in growing $8 billion hosted collaboration market.

November 8, 2011

D.H. Kass

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Cisco Systems Inc. said that it has teamed with Neutral Tandem Inc., a $200 million, Chicago, IL-based provider of interconnection services, to fashion a cloud-based collaboration service based on the vendor’s Hosted Collaboration Solution (HCS) for channel partners to rebrand and resell.

Cisco pegs the market for hosted collaboration at $8 billion by 2013, accounting for 31 percent of the unified communications segment.

Neutral Tandem currently is conducting a proof-of-concept test of the service with a select group of Cisco authorized channel partners, the company said. At this point, it has not entered in a final agreement with Cisco for the HCS nor has it fully assessed its ability to successfully develop and market the service to channel partners, officials said.

The company said that the service will enable value added resellers (VARs) and system integrators (SIs) to offer integrated messaging and presence, video calling and WebEx integration in single-site, multi-site and hybrid premise-based implementations.

Channel partners can sell the HCS solution as a monthly-subscription under their own brand and add managed services to the offering, officials said.

The service is being positioned as a boost for channel partners to meet the growing need for cloud solutions, distinguish themselves from competitors and add revenue without expending large amounts of upfront capital.

Neutral Tandem said that the HCS service has been constructed to integrate with a channel partner’s existing UC and collaboration offerings. The company said that it will not compete head-to-head with VARs and SIs to sell the hosted collaboration service to end customers.

"This will be an ideal way for VARs and system integrators to be able to offer a Hosted Collaboration Solution to their enterprise customers while benefiting from a new stream of recurring revenue," said Surendra Saboo, Neutral Tandem president and chief operating officer.

An official for Nexus IS Inc., a Valencia, CA-based Cisco Gold Certified Partner, and the first to test the service, said that Neutral Tandem’s network neutrality is a key factor in the offer.

“Our customers have been asking for a solution like this and Neutral Tandem's network neutrality is what drew us to their offer," said Mike Heiman, Nexus IS engineering vice president.  

"This is a great program that will provide us the ability to differentiate ourselves while competing more effectively," he said.

Cisco said that Neutral Tandem’s offer will help channel partners increase sales and profits.

"Cisco has a range of go-to-market strategies to meet the growing demand for cloud collaboration services and Neutral Tandem's white label offering of HCS is one model that presents a significant business opportunity for channel partners," said Richard McLeod, Cisco senior director, Worldwide Partner Collaboration Sales and Practice Management.

"As the first US-based partner to bring a white-label HCS offering to market, Neutral Tandem will help VARs and integrators drive growth and profitability while providing end customers with a proven collaboration solution,” he said.

Neutral Tandem said that it has more than 100 Ethernet sites and is the largest global Ethernet interconnection provider, a top 10 global IPv4 backbone provider and has a leading IPv6 network.

The company recorded sales of $199.8 million for the year ended December 31, 2010, a jump of more than 18 percent when compared to the prior year. Net income slid 21 percent year-over-year to $32.6 million, according to company documents.

For the quarter ended September 30, 2011, Neutral Tandem posted sales of $67.3 million, a 44.9 percent increase over the $46.5 million it recorded for the same period last year. The company earned $5.8 million for the quarter, a 39.6 percent slide when compared to the similar quarter last year, which it blamed on increased network expense, employee expenses and depreciation expense.

TAGS: Cloud,collaboration,Cisco,unified communications,VAR,channel partner,SI,Hosted Collaboration Solution,Neutral Tandem,Nexus IS

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